The owner of a garment wholesaling company has been sentenced to a year in prison for “scheming to undervalue imported garments and avoid paying millions of dollars in duties to the United States,” according to a press release from the Department of Justice. The owner’s company previously pleaded guilty in connection with this scheme, was sentenced to five years’ probation, and was ordered to implement an effective anti-money laundering compliance and ethics program with an outside compliance monitor.
The DOJ states that the company imported clothing from Asian countries and submitted fraudulent invoices to U.S. Customs and Border Protection that undervalued the shipments and allowed the company to avoid paying the full amount of tariffs owed.
At the owner’s direction, the Asian manufacturers prepared two invoices for the clothing, one that usually reflected 60-70 percent of the actual price and was paid by letter of credit and one that reflected the balance of the actual price and was paid by wire transfer. The first invoice was submitted to CBP, which used it to calculate the tariffs due on the imports. As a result of this scheme, in less than five years the company undervalued imports by about $82.6 million and failed to pay more than $17.1 million in tariffs.
The owner was also charged with failing to report millions of dollars in income on tax returns and failing to report large cash transactions to the federal government.
For more information on ensuring compliance with customs requirements, please contact ST&R.
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